Retail and commercial vacancy rates in downtownCharlottesville are low and steady. The city’s Office of Economic Development shows the vacancy rate for ground-floor retail spaces on the Downtown Mall as ranging from about 2 percent to 4 percent during 2015.

The Charlottesville branch of CBRE Commercial Real Estate offers a similar figure for downtown Class A office space, with a vacancy rate of 3.5 percent for the second quarter of 2015. CBRE Vice President Carolyn Shears said she expects the 2016 downtown office space vacancy rate to be lower than 3.5 percent.

But the low rates — significantly under the national average retail vacancy rate of 9.1 percent — provoke widely varied responses from members of the local business, real estate and development communities.

Discussing the origins of the planned office complex at 323 Second St. SE, Cushman & Wakefield | Thalhimer Vice President John Pritzlaff said, “The vacancy [downtown] is between 1 [percent] and 3 percent, which is an unhealthy level of vacancy. That means people can’t grow, they can’t move.”

Stuart Rifkin has been leasing retail spaces downtown for over a decade through his company Rifkin Associates, including the currently vacant space that formerly housed the Young Men’s Shop. He expressed skepticism at the notion that the vacancy rate is unhealthy.

“I think we have the perfect amount of office and retail,” Rifkin said. “It just takes a while, might take you a year or two. You just can’t show up and expect to open your boutique. But I don’t think we can build a lot more buildings downtown unless we have parking for them.”

Rifkin also spoke positively of the quick turnaround time for vacancies.

Bill Rice, another local real estate broker, also described vacancy periods for open properties as brief or non-existent. He currently is advertising a mixed-use leasing opportunity on the mall near the Omni Charlottesville Hotel.

“That won’t be open until the end of July. We’re just getting advertising out in advance so we can stay at 100 percent occupancy,” Rice said. “[These kinds of spaces] are picked up quickly.”

Smart Cville, a local nonprofit civic improvement organization, has tracked vacancies on the mall since 2009. Lucas Ames, the organization’s chairman, related the high demand for downtown office and retail space to the mall’s relatively strong economic resilience.

“The mall is not immune to economic downturns, which isn’t a surprise,” said Ames. “A big takeaway for me is it’s also very resilient. [There are not usually long-term] vacancies along the mall, and it seems to not have much trouble bouncing back.”

Tim Miano, co-founder of the innovation infrastructure company SP@CE, spoke of the vacancy rate from a business development standpoint. He ultimately raised a similar concern to Pritzlaff’s, stemming from his perception of major discrepancies between supply and demand.

Miano originally planned to build a technology incubator and accelerator in Charlottesville. He changed his plans upon coming to the conclusion that any fast-growing company that emerged from the incubator would be unable to find a solid foothold in the downtown area.

“If you’re a company that thinks that in the next year you might expand from 20 employees to 50 employees, or more, there is effectively little to no space available in downtown Charlottesville,” said Miano. “Nothing is going to solve this problem unless there is additional space. I have multiple meetings a week with young companies looking for space. There’s an insufficient supply for the degree of demand, and as a result prices increase.”

Miano emphasized that he could only speak to the needs of the innovation sector. He also said he understands why the vacancy rate is not viewed as an issue from a real estate perspective.

He also suggested that housing presents a greater obstacle than parking to businesses starting and expanding in Charlottesville.

“Housing is a huge issue at every single economic level, from low income to middle income,” said Miano. “There are no starter homes in Charlottesville.”

This, Miano said, limits talent attraction and makes it all the more difficult for new business owners to pay high premiums for downtown space.

Miano’s point about space as a potential barrier to growth can be illustrated with local technology firm WillowTree Apps. Between 2010 and 2016, the company grew from 4 to 150 employees.

While prospective business owners, whether they plan to run startups or tech companies or retail stores, may be able to wait until a location opens up, companies like WillowTree urgently need new space as they rapidly expand. For WillowTree, that meant moving from a small space in the King building to the top floor of their current Fifth Street location, which they now occupy in its entirety.

When even that space became insufficient, the company found itself with limited options. They ultimately managed to lease much of the brand-new Treehouse building, located just south of the Downtown Mall.

“Looking into new office spaces for us was massive,” said Blake Sirach, chief experience officer for WillowTree. “It was part luck that we were able to get in on Oliver [Kuttner]’s construction, and able to have a hand in that development. The key part of our move there was our ability to build it out to meet our needs.”

Miano described WillowTree’s ability to expand through new construction as “the rare exception.”

Sirach also cited parking availability as a limiting factor, in spite of his company’s successful office expansion. All WillowTree employees are guaranteed downtown parking, resulting in an ever-ongoing hunt to lease spaces.

“We’re incredibly worried about the parking constraint,” Sirach noted. “All we can do is keep looking, and keep aggressively leasing spaces where they’re available.”

New downtown development projects typically offer some parking on site, such as the garages planned for Market Plaza on Water Street and the planned office complex at 323 Second St.

Both Miano and Rifkin, in spite of their contrasting views on the impact of low vacancy, said other infrastructure growth must accompany any new office and retail space construction.

As Rifkin concluded, “Office users want to be downtown because you’re working in a food court, outdoors, relatively easy access … But, ultimately, parking’s going to be the bellwether.”

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The former Young Men's Shop is available for lease and houses a pop-up boutique in the interim